Trade disputes are big news lately, with President Donald Trump going toe-to-toe with China in an escalating trade war. Imports of Chinese goods are dropping drastically as American companies look for other sources. Meanwhile, additional tariffs proposed by Trump threaten to put a damper on U.S. economic growth. This latest trade war is ugly, but it’s only one in a string of similar disputes through the years. This list covers 13 of the worst trade disputes in American history.
Trade Dispute No. 1: The Boston Tea Party
Major trade disputes have been around since America’s earliest days. We owe our status as an independent country partially to perhaps the most famous trade dispute in American history: the Boston Tea Party. It ignited in 1765 when Great Britain enacted the Stamp Act that imposed a tax on paper documents in the colonies. Two years later the Townshend Revenue Act imposed taxes on popular merchandise such as glass, paint and tea. The Boston Non-Importation Agreement of 1768 led to a repeal of everything but the tea tax, and the colonies retaliated with a boycott of the British East India Company’s tea in favor of using smuggled tea. On Dec. 16, 1773, a “tea party” organized by the Sons of Liberty dumped more than 92,000 pounds of British East India Company tea into the water at Griffin’s Wharf. An estimated 116 people destroyed tea worth more than $1.7 million in current dollars.
Results of the Boston Tea Party
While the ultimate outcome of the Tea Party was positive because it led to the creation of the United States, the immediate effects were harsh. In 1774, Britain’s King George III led efforts to pass the “Coercive Acts” as punishment. Among other things, these acts shut down Boston Harbor until the tea company was reimbursed, halted free elections in Massachusetts and mandated that colonists house British troops whenever it was demanded of them. This fanned the flames of independence from British rule and led to the start of the Revolutionary War on April 19, 1775. The war itself exacted a heavy toll, with 6,800 Americans dying in action and 6,100 more being wounded.
Trade Dispute No. 2: The Fordney-McCumber Tariff of 1922
The Fordney-McCumber Tariff of 1922 was a major move toward protectionism by the U.S. It covered a wide range of goods — including raw sugar, metals and certain agricultural products — and gave the U.S. one of the highest tariff rates in the world, angering trading partners in Europe and Latin America. The League of Nations (of which the U.S. was not a member) even called a World Economic Conference in 1927 to negotiate a truce. Its efforts were fruitless, however, leading to a trade war that affected U.S. exports to other countries.
Results of the Fordney-McCumber Tariff Act of 1922
Latin American and European countries struck back by boosting their own tariff rates. Some of the retaliation was particularly severe, with Spain imposing a 40% increase in duties on U.S. imports. France hiked automotive tariffs from 45% of their value to 100%, hurting the U.S. auto industry. Shortly after the failed attempt by the League of Nations to find a diplomatic solution, Germany and Italy hit U.S. wheat with high tariffs. President Herbert Hoover signed even more restrictive protectionist legislation in 1930. These actions led to a steep decline in world trade and likely contributed to the Great Depression.
Trade Dispute No. 3: The Smoot-Hawley Tariff Act of 1930
The Fordney-McCumber Tariff created a great deal of animosity between the U.S., Europe and Latin America. But it was just a precursor to the largest trade war in the history of the United States, which kicked off with the Smoot-Hawley Tariff Act of 1930. The Great Depression was already dawning when President Hoover signed the Smoot-Hawley Tariff Act in June 1930. This wide-ranging law affected hundreds of products, saddling them with average tariffs that exceeded 45%.
Results of the Smoot-Hawley Tariff Act
The Smoot-Hawley Tariff Act had a brutal ripple effect because it applied to goods coming from all countries. Prices of staples such as sugar and eggs skyrocketed at perhaps the most fragile point in U.S. economic history. Rather than protecting American markets, the law backfired spectacularly. Canada led a revolt of other U.S. trade partners, all of whom hit U.S. exports with high retaliatory tariffs. This caused U.S. exports to drop by a whopping 61% from 1929 to 1933 before the law was repealed in 1934. Not only did the Smoot-Hawley Tariff worsen the effects of the Great Depression, but some historians believe it might have helped Nazis and other fascist parties rise to power.
Pictured: Black Thursday, Oct. 24, 1929
Trade Dispute No. 4: The 1962 Chicken War
The U.S. decided to play chicken with the European Economic Community (EEC) in 1962 after the EEC hiked its common external tariff on all poultry, including chicken. The U.S. didn’t immediately hit the EEC with retaliatory tariffs. It made an initial attempt to find a diplomatic solution, but those efforts were futile. In 1963, the U.S. decided to give its EEC trade partners the bird and slap tariffs on such diverse items as brandy, potato starch and light trucks.
Results of the 1962 Chicken War
Despite the negotiations and retaliatory tariffs, the 1962 Chicken War had no clear-cut winner. Instead, it left behind an expensive legacy in the form of a 25% tariff on imported light trucks in the U.S. that’s still in place today and that also affects two-seat SUVs. The lasting effect of this tariff is fewer small pickup truck options for American consumers because European automakers won’t sell many of those vehicles in the U.S. market.
Trade Dispute No. 5: United States and Japan Trade Conflicts in the 1980s
The 1980s were a contentious time between the U.S. and Japan, at least in terms of trade. With the Energy Crisis headaches of 1973 and 1979 still fresh in Americans’ minds, and U.S. car manufacturers lagging in the production of smaller, more fuel-efficient vehicles, Japan snatched an ever-growing share of the U.S. auto market. Congress was on the brink of enacting retaliatory measures before the two countries negotiated solutions. Voluntary export restraint (VER) agreements that resulted from the negotiations included limits on Japanese auto and steel exports to the U.S. and lower barriers for U.S. companies looking to sell in Japan.
Pictured: Nissan Motor Company car assembly in Japan
Results of the United States and Japan Trade Conflicts in the 1980s
While the U.S. and Japan came to terms on imports with voluntary agreements, it couldn’t undo the damage inflicted on the U.S. automotive industry. American carmakers still haven’t regained the dominant market share they once enjoyed in the U.S. Meanwhile, Japanese automakers began opening car manufacturing plants in America, starting with Honda in 1982. Japanese plants in the U.S. still import Japanese parts for their American-built cars, to the tune of $16 billion in 2018. This has earned the wrath of President Trump, who threatened to reignite the auto wars with tariffs of up to 25% on imported auto parts and vehicles.
Pictured: First Honda car manufactured in Marysville, Ohio
Trade Dispute No. 6: Canada/US Lumber Wars
Canada isn’t a country known for its aggressiveness, but it’s a fierce competitor when it comes to trade wars. It blazed the path when it led a trade partner revolt against the U.S. in response to the Smoot-Hawley Tariff Act in the 1930s. Canada struck again a half-century later when the two countries came to loggerheads over the price of timber in 1982. The U.S. fired the first shot by accusing Canada of subsidizing softwood lumber. The two countries differ sharply in their approach to the lumber industry. U.S. loggers harvest from private lands, meaning prices fluctuate based on market demand. Their Canadian counterparts log public lands and have prices determined by the government. The dispute eventually hit a stalemate which ended in 2017, when President Trump slapped tariffs on Canadian lumber.
Pictured: 1983 British Lumber Mill
Results of the Canada/US Lumber Wars
Tariffs on Canadian lumber have hit the U.S. construction industry particularly hard. In 2018, prices of lumber shot up 60% from two years earlier, angering the National Association of Home Builders. Not only have the tariffs increased lumber prices, but they’ve also slowed the flow of Canadian lumber into the U.S. market, creating delays in construction schedules that have pushed home prices higher.
Trade Dispute No. 7: The Pasta Wars of 1985
When the U.S. tried to make lemonade out of lemons by increasing sales of citrus in European markets, it didn’t end well. At the time, Europe favored citrus grown around the Mediterranean rim. In 1985, the Reagan Administration decided that the best way to open the door for more sales of lemons, oranges and other citrus fruits to Europe was to boost tariffs on European pasta imports. It imposed a 40% tariff on imported pasta made without eggs and a 25% tariff on pasta made with eggs, claiming the measures were necessary to protect the $1.3 billion U.S. pasta industry, which was feeling the heat from Italian imports.
Results of the Pasta Wars of 1985
The European Common Market didn’t take kindly to paying more to export pasta to the U.S. and retaliated by imposing tariffs on imported lemons and walnuts. The U.S. quickly called for a truce and all parties dropped the tariffs. While there was no immediate win for U.S. citrus growers, the Common Market did soothe the wound by stating it would look at ways to help the U.S. break into the Mediterranean-dominated citrus market.
Trade Dispute No. 8: The US/EU Beef Hormone Dispute of 1989
In 1981, the European Union (EU) started imposing restrictions on the use of hormones in cows and other animals being raised for meat. By 1989, the EU issued a full ban on hormone-treated meat. The U.S. had no such restrictions, claiming there was no scientific basis for the ban. This led to a trade dispute in 1989 when the EU halted the import of hormone-treated meat from U.S. producers. The U.S. promptly slapped back by hitting the EU with retaliatory tariffs on items such as Roquefort cheese, truffles and Italian mineral water. The conflict went on until 1997 when both parties appealed to the World Trade Organization (WTO). The WTO ruled against the ban, but the EU refused to lift it, causing the WTO to back the U.S. retaliation. By 2009, the two parties reached a compromise in which the EU created a duty-free quota for imports of specially produced beef from the U.S. in exchange for the elimination of U.S. tariffs on EU goods imposed during the dispute.
Results of the US/EU Beef Hormone Dispute of 1989
While the 2009 agreement looked workable on the surface, the U.S. claimed that the EU did not implement the plan as intended, negatively impacting the $6 billion-a-year American beef export industry. American officials accused the EU of allowing other countries to fill the quota of specially produced beef. This led to President Barack Obama’s administration revisiting the issue in 2016, but a final resolution did not happen until 2019, when the Trump administration got an agreement from the EU that 35,000 tons of nonhormone-treated beef out of the 45,000 allowed into the EU each year will come from the U.S. Even though the agreement is signed, it remains to be seen whether it will be honored.
Trade Dispute No. 9: US/China 1990s Disputes Over Intellectual Property
While theft of intellectual property by Chinese companies is at the forefront of current trade disputes, it’s actually an old issue that first came to a head in 1991. Concerns over intellectual property theft by entities in China were raised throughout the late 1980s and early 1990s as the volume of trade skyrocketed between that country and the U.S. By 1991, the issue was so serious that the U.S. Trade Representative declared China a Special 301 “Priority Foreign Country,” and threatened to hit it with major retaliation if it didn’t take steps to curb the copyright abuses. Both sides stepped up to the negotiating table. After lengthy discussions running from 1991 to 1994, China agreed to strengthen its enforcement against infringement of intellectual property and to take steps to open its markets.
Pictured: Anti-Piracy Press Conference in Beijing on Oct. 12, 1995
Results of the US/China 1990s Disputes Over Intellectual Property Rights
Even though China agreed to take action to curb theft of foreign intellectual property, the issue remains a sore spot nearly 30 years later. Intellectual property theft has become a major talking point for the Trump administration, along with the influx of cheap Chinese steel and aluminum. Chinese officials still claim to be fighting IP theft, but U.S. officials estimate that these thefts cost American companies between $225 billion and $600 billion each year.
Pictured: Chinese Law Enforcement officials publicly destroy pirated DVDs
Trade Dispute No. 10: 1990s Battle of the Bananas
The “Battle of the Bananas” began in 1993, when the EU banana import regime was formed and immediately granted preferential treatment to growers in the EU and former European colonies such as Cameroon, Belize and the Ivory Coast. This didn’t sit well with countries like Columbia, Costa Rica and Guatemala, which were home to large fruit plantations run by U.S. companies. After failed negotiations, the U.S. and the affected Latin American companies filed a dispute with the WTO. The organization in 1997 ruled in favor of the U.S., but the EU refused to implement the WTO’s recommendations to resolve the issue. In 1999, the WTO gave the U.S. permission to strike back by imposing $191 million in trade sanctions on the EU. Appeals dragged the WTO case on until 2008.
Results of the 1990s Battle of the Bananas
While the U.S. and the EU finally came to terms after the final WTO ruling, the dispute impacted U.S. banana growers for 16 years. The eventual resolution also left the U.S. looking bad in the eyes of economic development organizations, which used it as an example of a major world power backing its corporations at the expense of poor farmers in countries with struggling economies.
Trade Dispute No. 11: 2002 Steel Tariffs
Imported steel hit the U.S. steel industry like a sledgehammer between 1997 and 2001, throwing one-third of all U.S. steel capacity into bankruptcy. The President George W. Bush’s administration stepped in in 2002, slapping certain steel imports with tariffs that would phase down each subsequent year and end in 2005. U.S. trade partners were not happy, even with an end in sight, and took their complaints to the WTO. The organization found in favor of the complainants.
Results of the 2002 Steel Tariffs
The Bush administration might have meant well with the temporary tariffs, but its actions to save one industry ended up having brutal repercussions for a wide swath of American workers. A 2002 research paper, “The Unintended Consequences of U.S. Steel Import Tariffs: A Quantification of the Impact During 2002,” found that, far from helping, the tariffs actually led to more American job losses than the total number of Americans employed by the U.S. steel industry. Those jobs evaporated due to the ripple effects of skyrocketing steel prices. In the face of the WTO ruling and the disastrous economic effects, the Bush administration ended the measures two years early, in December 2003.
Pictured: Bethlehem Steel factory in United States
Trade Dispute No. 12: 2004 Boeing-Airbus Subsidy Dispute
The 2004 Boeing-Airbus trade dispute was the result of longtime conflicts between the U.S. and EU over whether either of the two subsidized its domestic civil aircraft industries, either directly or indirectly. The two industry giants — Holland-based Airbus and Chicago-based Boeing — landed in the middle of the dispute. The U.S. and EU settled their initial tensions in 1992 when both agreed to limits on government subsidies to the aircraft industry. By 2004, they were back in conflict, with the U.S. accusing the EU of not following the agreement. The U.S. also withdrew from the 1992 agreement and appealed to the WTO dispute settlement system. It took more than a decade to get a final ruling, but the WTO Appellate Body finally ruled in favor of the U.S. In 2016, the WTO found that the EU had not stopped illegal aid to Airbus.
Pictured: Airbus chairman Noel Forgeard shows Airbus A380
Results of the 2004 Boeing-Airbus Subsidy Dispute
The lengthy dispute and the 2016 WTO ruling didn’t end the conflict between the U.S. and the EU on the question of improper aircraft industry subsidies. The legal wrangling continues in 2019, with a final ruling expected later this year. Depending on the outcome, the U.S. is poised to retaliate to the tune of $25 billion worth of imports from the EU. But the conflict could drag on if the EU imposes its own retaliatory measures.
Pictured: Airbus A330 Neo flies over Boeing sign at 53rd International Paris Air Show
Trade Dispute No. 13: The Chinese Tire Dispute of 2009
While Japan and the U.S. had a trade dispute over cars during the 1980s, China had a dispute in 2009 that focused on just one part of an automobile: the tires. Chinese tires flooded the American marketplace in the mid-2000s, with the number of imported tires tripling between 2004 and 2008. An International Trade Commission (ITC) investigation in 2009 determined that this influx was hurting U.S. tire producers, who couldn’t compete on price with the cheaper Chinese goods. This led the Obama administration to impose a three-year tariff hike on certain imported Chinese tires.
Results of the Chinese Tire Dispute of 2009
China did not accept the findings of the ITC and took its own action, complaining to the World Trade Organization (WTO). Ultimately, the WTO found in favor of the United States. China then took matters into its own hands, imposing tariffs on certain automobiles made in America. China didn’t explicitly state that this was a response to the tire dispute, but some believe the country wouldn’t have taken this action if the U.S. had dropped the tire tariffs.
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